New social-focused PRI report outlines four key pillars for ‘decent work’.
Investors should engage with investee companies on how they are supporting their informal workers, as well as full-time employees, according to a report on ‘decent work’ by the UN-convened Principles for Responsible Investment (PRI).
“All types of ‘worker’, whether an independent contractor or full-time employee, should be covered by minimum safeguards like fair pay,” said Remi Fernandez, Specialist on Human Rights and Social Issues at the PRI and author of the report.
Informal workers tend have more casual work arrangements and no fixed salary or legally defined employment status. As a result, they are “disproportionately exposed” to non-decent work conditions and lack access to social protection and other benefits.
The paper aims to define the concept of decent work and outlines how investors should take a “human-centric” approach when engaging with companies on their treatment of workers.
It covers four key themes: workers’ voice and social dialogue, living wage, equal opportunity and treatment, and access to benefits, health and safety and social protection.
The Covid-19 pandemic highlighted the vulnerability of informal workers and “exacerbated decent work deficits and social inequalities” that disproportionately affected disadvantaged communities, the paper noted. Investors can help to address these deficits by ensuring all kinds of workers are supported, it added.
However, collating information on informal workers from investee companies is “one of the most challenging areas of social-related data aggregation for investors”, said Fernandez.
“There’s an absence of robust and comparable social data across corporate supply chains, but it can be increased through triangulation – such as investors using data from worker representative organisations and using it to validate any information being disclosed by companies.”
He noted that integrating informal work into the formalised economy will also help to drive improvements in corporate reporting.
Fair work, fair pay
Particularly since the pandemic, investors have increasingly focused on ensuring companies are paying their workers – including informal workers – a fair living wage in line, with attention further intensified by the rising rate of inflation.
“A fair living wage has a trickle-down effect for other social-related issues. For example, a parent on a living wage will be able to better support their children through education and other opportunities,” said Fernandez.
Investors collectively managing £2.2 trillion in assets, including HSBC Asset Management and UK workplace pension scheme Nest, publicly announced their support of a resolution filed against UK supermarket Sainsbury’s by NGO ShareAction, calling for the company to become an accredited living wage employer.
Prior to the vote, Sainsbury’s agreed to raise pay for staff in its outer London stores, but failed to extend this to third-party contractors, including their security guards and cleaners.
The resolution failed to pass, gaining 16.7% of the vote.
Minimum safeguard expectations
The report is the first step in the PRI’s plan to develop practical implementation guidelines for investors looking to prioritise decent work in their investee companies.
The paper outlined a multi-year work programme. It includes plans to support investors to identify relevant data points and metrics, specific guidance across each of the four pillars, and educating investors on key decent work risk areas and how these can impact investment decisions across asset classes.
“The first priority is developing guidance and outlining minimum safeguard expectations for investors to utilise in their engagement efforts,” said Fernandez. “From there, we will eventually develop sector-specific guidance.”